Microsoft, CSFBdirect, DoubleClick

MichaelBaron

Stocks to watch

Microsoft offered investors good news with a pre-announcement of better than expected revenue. The company said on Wednesday that it will meet analysts' expectations and report a $2.6 billion fiscal fourth quarter loss because of a $3.9 billion noncash charge from losses in certain cable and telecom securities. Profit will accordingly be hurt and now is expected, including the charge, to be 1 cent a share. Meanwhile, quarterly revenue will top targets with a range of $6.5 billion to $6.6 billion vs. earlier estimates of $6.3 billion to $6.5 billion. More fourth-quarter and full-year details will come on July 19 when the company reports results. See full story.

Genentech
DNA, +4.12%
earned 19 cents a share vs. 15 cents a share in the year ago quarter, matching the First Call/Thomson Financial average estimate of analysts. Revenue also climbed to $410 million from $309 million in last year's second quarter, driven by sales of its cancer drug, Rituxan. See related story.

Sonus Networks
SONS
reported a profit for the second quarter, reversing last year's loss. The maker of hardware and software for voice and data networks earned $1.2 million, or 1 cent a share, beating the average analyst expectation from First Call/Thomson Financial. See related story.

Motorola
MSI, +0.02%
reported a loss of 11 cents a share, or $232 million, for the quarter, slightly ahead of Wall Street's consensus expectation of a 12 cent loss. The technology giant said earnings were squeezed by the slowdown in two of its largest divisions: hand-held telecommunications and semiconductor chips. Motorola rang up sales of $7.52 billion, down 19 percent from the $9.25 billion reported a year ago. Chief Executive Christopher Galvin said he is "already seeing signs of recovery" and expects to see a rise in customer demand, especially for the new "2.5G" telecom products, in the third quarter. Semiconductors should "resume a double-digit pattern next year," he said. See full story.

Acclaim Entertainment
AKLM
climbed 37 cents, or 9.3 percent, to $4.36, the maker of video games -- including Star Baseball and Crazy Taxi -- reported third-quarter earnings, which broke even on a per share basis, missing by 2 cents per share the average estimate of two analysts polled by First Call/Thomson Financial. Revenue jumped in the latest three months to $38.6 million from $4.8 million in the same period a year earlier. Acclaim said it remains optimistic about becoming profitable in the fourth quarter.

Redback Networks
RBAK
posted a loss of 26 cents a share vs. a loss of 5 cents a share reported a year ago. Redback cited the downturn in the telecommunications market as the reason for revenue of 59.4 million, compared to $48.7 million in the year ago quarter. Shares of the company closed at $6.53, down 7 percent, ahead of the announcement. See related story.

Advanced Energy Industries
AEIS, +0.90%
posted a loss of $4.9 million, or 15 cents a share, excluding one-time items, missing the consensus estimate of a 9 cent loss. Last year, second-quarter earnings totaled 45 cents a share. Revenue totaled $46.2 million, down 46 percent compared with the year-ago total of $85.7 million. The company attributed the shortfall to the global slowdown in capital equipment. The company sees no evidence that order demand will improve for the remainder of 2001. Shares closed down $1.60 to $32.20 ahead of the news.

Shares of Tyco International
TYC, +74.50%
slid $2.76, or 5.2 percent, to $50.50. Volume was 34.3 million shares, enough to make it the most-active NYSE issue. Merrill Lynch said it was "very comfortable" with Tyco's earnings outlook, despite recent warnings by other companies exposed to electronics and telecom end markets. The firm reiterated its "buy" rating and $100 price target.

Advancers

AutoZone
AZO, +2.40%
jumped 11 percent to $42.11 after the company said it has hired Morgan Keegan & Co. to assist in the sale of its TruckPro heavy-duty truck parts unit. The company's board also approved the repurchase of an additional $100 million worth of its common stock. Also, same-store sales rose 6 percent in the first half of the fourth quarter, prompting AutoZone to said it's likely that results for the period will exceed the current Wall Street profit estimate of 96 cents a share.

Aztar Corp.
AZR, +18.18%
rose 8.5 percent to $12.70 after the Phoenix-based gaming firm reported second-quarter earnings of $16 million, or 40 cents per share, down from a year-ago profit of $22.4 million, or 51 cents a share, but a nickel ahead of Wall Street expectations. Revenue slid in the latest three months to $210.9 million from $221 million in the same period a year earlier. The company attributed the strength to its focus on programs with higher margins and its tight control on expenses.

Biolase
BLTI
leapt 6.2 percent to $5.15 after the San Clemente, Calif., medical technology firm received clearance from the Food and Drug Administration to market its Waterlase dental laser for a number of soft tissue procedures.

Capstone Turbine
CPST, +11.11%
surged 12 percent to $19.05 following positive comments from Banc of America, which has a "buy" rating on the stock. The firm said there is no fundamental reason for the recent pullback in the shares. B of A said "second-quarter trends appear to be on track" and that the company is trading "at a significant discount to its peers despite being the only company shipping commercial products today."

Chico's FAS
CHS, +1.00%
rose more than 7 percent after the Fort Myers, Fla., women's casual apparel retailer reported a strong 39.5 percent jump in June sales to $32.8 million from $23.5 million in the same period a year earlier. Same-store sales for the five weeks ended July 7 leapt 15.6 percent.

CSFBdirect
DIR
soared more than 27 percent to $1.26 after Credit Suisse First Boston agreed to acquire the remaining 18.4 million shares of CSFBdirect in public circulation for $110 million. The deal values CSFBdirect, Credit Suisse's online brokerage unit, at $6 per share.

CSX Corp.
CSX, +1.38%
jumped 10 percent to $31.25 after the company said it expects to report second-quarter earnings that are well above consensus analyst expectations. The railroad operator said it will report earnings for the period of approximately $108 million, or 51 cents a share, an increase of 125 percent over earnings of $48 million, or 23 cents a share recorded in the same period a year ago. Analysts had been expecting EPS of 36 cents, according to First Call/Thomson Financial. CSX attributed the better-than-anticipated results to its rail operations and gains from real estate activities.

Gilat Satellite Networks Ltd.
GILTF
tacked on 19.5 percent, or $2.15, to $13.15 after the Israeli firm said it expects revenue and gross margin to meet its "previously announced guidance" for the quarter ended June 30. Operating income for the period is pegged at $3 million to $5 million. Gilat didn't break down this performance into a per share figure. Analysts surveyed by First Call/Thomson Financial are looking for a profit of 7 cents a share in the period, on average. In addition, Gilat said EchoStar
DISH, -1.58%
has agreed to assume a majority stake in Starband, a satellite Internet access venture that uses Gilat technology.

Investors Financial Services
IFIN
rose 8.9 percent, or $6.07, to $74.33 after the company reported second-quarter earnings of $11.9 million, or 36 cents a share, up from a year-ago profit of $8.1 million, or 26 cents a share, and 2 cents ahead of the average estimate of analysts polled by First Call/Thomson Financial. Net operating revenue jumped 66 percent in the latest three months to $87.8 million from $52.9 million in the same period a year earlier.

Movie Gallery
MOVI
tacked on $1.74, or 8.7 percent, to $21.69 after the Dothan, Ala., video store operator said it expects second-quarter results to top Wall Street expectations. The company pegged earnings before items for the period at 21 to 23 cents a share, ahead of the average estimate of two analysts polled by First Call/Thomson Financial for a profit of 20 cents a share.

Pacific Sunwear of California
PSUN
jumped $2.26, or 11.6 percent, to $21.67 after the company said it expects second-quarter earnings to come in at the lower end of its previously disclosed range of 13 to 17 cents per share. Describing June as "a difficult month in a very promotional environment," the company said company same-store sales fell 7.4 percent in the five weeks ended July 8. Total sales for the period rose to $57.9 million from $52.3 million a year ago.

RightChoice Managed Care
RIT, -0.49%
added $6.74, or 15.6 percent, $49.85 after the St. Louis health-care benefits firm said it expects second-quarter earnings to top Wall Street expectations. The company is projecting a profit of 76 to 78 cents per share for the three months ended June 30, better than the average estimate of analysts polled by First Call/Thomson Financial for earnings of 62 cents a share. RightChoice anticipates earnings of $2.75 to $2.80 per share for the full year, ahead of the analysts' consensus estimate of $2.58. RightChoice attributed the strong results to continued membership growth in its self-funded PPO business, and improved margins in its underwriting business. The company also forecast sequential earnings growth of 20 percent for 2002.

RMH Teleservices
RMHT
leapt $5.43, or 45.6 percent, to 17.33 after the Bryn Mawr, Pa., maker of customer relationship management services lowered expectations for the fourth quarter of fiscal 2001 but offered a bullish outlook for fiscal 2002. The company cut its outlook for the three months ending September 30 to a profit of 4 cents per share from 12 cents. Analysts polled by First Call/Thomson Financial were looking for a profit of 13 cents a share, on average. On a revenue basis, RMH raised expectations for the fourth quarter to $53 million from $50 million. In addition, the company secured a multi-year relationship with United Parcel Service
UPS, +0.30%

Seven-Eleven
SE, +2.45%
rose 7.8 percent to $12.80 after the Dallas convenience store firm reported a 6.6 percent increase in same-store merchandise sales for its U.S. stores in June. Total merchandise sales for the month reached $635.6 million, a jump of 7.7 percent from the same period a year earlier. The company attributed the strong performance to demand for pre-paid phone cards, non-carbonated beverages, cigarettes, beer and wine, bakery items, fresh foods, and its Slurpee semi-frozen beverage product. Sales from gasoline rose 7.1 percent for the month to $263.1 million. Second-quarter results are due on July 26. Analysts polled by First Call/Thomson Financial are forecasting a profit of 26 cents per share.

Tenet Healthcare
THC, +1.66%
surged 6.3 percent to $54.99 after the Santa Barbara, Calif., health-care services firm reported fourth-quarter earnings of 68 cents per share, trouncing Wall Street expectations by 6 cents. Earlier in the session, the stock hit a 52-week high of $54.60. Income from operations jumped 41 percent to $225 million from $160 million in the same period a year ago. An optimistic Tenet also raised its outlook for the "next several years," saying it now expects earnings growth in the "mid-to-high teens" each year, up from its prior "mid-teens" expectation. Admissions growth in the quarter jumped 5.5 percent on both a same-facility and total-facility basis. The company said growth came through strength in demand for certain core services and activity with baby boomers.

W Holding Co.
WBPR
zoomed 8.2 percent higher after the Puerto Rico bank holding firm reported second-quarter earnings of $15.4 million, or 31 cents a share, an improvement over last year's equivalent profit of $11.2 million, or 23 cents a share, and in line with Wall Street expectations. Total assets reached $5.07 billion as of June 30, up 19 percent from $4.26 billion as of December 31. The company attributed the strong results to an increase in net interest income, which leapt 32 percent due to an increase in the average amount of loans and investment securities outstanding from the same period a year ago.

Wolverine World Wide
WWW, +1.22%
rose 13.8 percent to $17.17 after the Rockford, Mich., footwear firm reported second-quarter earnings of $8.9 million, or 21 cents a share, up from a year-ago profit of $7.6 million, or 18 cents a share, and a penny ahead of the average estimate of analysts polled by First Call/Thomson Financial. Sales jumped 7.9 percent in the latest three months to $151.7 million from $140.6 million in the same period a year earlier. The company said its Merrell and Harley-Davidson footwear brands turned in strong double-digit sales growth during the quarter, while its core North American Hush Puppies business, its Wolverine boot business and its CAT footwear business all posted moderate low to mid single-digit sales increases. Gross margins also improved by 210 basis points in the period.

Decliners

Comverse Technology
CMVT
plunged $13.07, or 33.5 percent, to $25.95 after the company lowered expectations for the second quarter and second half of the year, citing a recession in capital spending and the macro-economic slowdown, as well as the strong dollar. The provider of multimedia communications software said it now expects earning of approximately 28 cents per share and revenue of $345 million for the quarter ending in July, while analysts surveyed by First Call/Thomson Financial had been expecting 43 cents and $369.3 million, on average. The warning affected rivals such as Openwave
OPWV
and Amdocs
DOX, +1.11%
as well as Ulticom
ULCM
which is majority owned by Comverse. See full story.

DoubleClick
DCLK
fell 16 percent to $10.09 after the company reported a narrower-than-expected second-quarter loss and announced it will lay off 10 percent of its work force, leaving 1,850 employees. See full story.

Lantronix
LTRX, +1.33%
sank 18.5 percent, or $1.87, to $8.22 after Digi International
DGII, +0.82%
filed a patent infringement lawsuit against the company. The suit alleges that Lantronix violated a Digi patent related to network control of device servers.

Lennox International
LII, -0.30%
slid 10.8 percent to $9.11 after the company warned that second-quarter earnings before items would come in between 30 and 35 cents a share, below Wall Street expectations for a profit of 45 cents a share. The Dallas appliance firm cited the negative impact of cooler-than-normal temperatures and the domestic economic slowdown, which hurt the performance of its retail operations. For the full year, the company pegged earnings at 60 to 70 cents a share, under analysts' estimates for a profit of $1.04.

Metrologic Instruments
MTLG
sank $2.37, or 24.3 percent, to $7.40 after the company said it expects a loss instead of a profit currently expected. Including interest expense and goodwill amortization, the company expects a loss of 14 cents to 17 cents a share. Two analysts polled by First Call expected a profit of about 7 cents a share.

Newell Rubbermaid
NWL, -2.98%
dropped 6.9 percent after the company warned that it expects second-quarter earnings to miss expectations due to the continued economic slowdown in the U.S. and Europe. The consumer products company now anticipates reporting earnings per share of 29 cents for the quarter ending in June, compared with previous EPs expectations of 37 to 42 cents. See full story.

Polaroid
PRD, +0.00%
said it will explore alternatives that could include the sale of the company. The instant photography pioneer also said it received a waiver from bank creditors on loan payments due this week, but will not make certain interest payments on some bonds. Before the announcement, shares fell to their lowest level in decades following a Wall Street Journal report that said the company was considering a voluntary filing for bankruptcy protection. The company refused comment on the speculation. Shares ended the day down 78 cents, or 28 percent, at $1.92. See full story.

SFBC International
SFCC
lost $1.40, or 6 percent, to $24.65 after the Miami provider of outsourced drug development research services said it plans to step up its acquisition program with the purchase of an undisclosed bioanalytical laboratory. The company said it's in the process of reviewing the lab's financial statements and that it expects to close on the deal, which would be immediately accretive to earnings, in late July. Without any acquisitions, SFBC expects sales growth in 2001 of at least 40 percent from 2000's total of $19.7 million. The company also said it has identified two undisclosed "niche providers," which it may acquire and that it plans to use its stock and leverage its "extremely strong balance sheet" for these acquisitions.

Vysis
VYSI
tumbled 12.5 percent to $21 following news that BP plc
BP, -1.51%
is mulling the possible divestiture of its 65 percent ownership in the Downers Grove, Ill., life sciences firm. BP has filed a Form 13-D with the Securities and Exchange Commission stating that it does not consider this stake to be a strategic holding. BP said it could sell all or part of its Vysis shares, while cautioning that it could offer no assurance that a sale would take place. BP added that it has been "very pleased" with the performance of Vysis and its management.

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